Question
The HiTop Company is expected to pay a dividend of $1.50 next year. The current stock price is $25 per share. You believe that the
The HiTop Company is expected to pay a dividend of $1.50 next year. The current stock price is $25 per share. You believe that the dividends of HiTop will grow at a rate of 5% per year forever. If the required rate of return for HiTop is 11.25%, then:
You should buy the stock because you believe that the value of the stock will rise to: $25.20
You should not buy the stock because you believe that the value of the stock will fall to: $24.0
You should buy the stock because you believe that the value of the stock will fall to: $24.00
You should not buy the stock because you believe that the value of the stock will rise to:$25.20
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